Eneabba down on axed syngas deal

Shares in Eneabba Gas have slumped after it canned its agreement with Carbon Energy to provide a syngas supply for the planned Centauri 1 power station.

Eneabba announced late yesterday that it would not extend the heads of agreement with Brisbane-based Carbon Energy, which is due to expire at the end of next week.

Earlier this year, Carbon had agreed to acquire more than 1,000 square kilometres of Eneabba's coal tenements in the Mid West and develop an underground coal gasification syngas supply for the power station near Dongara.

However, Eneabba said yesterday that following an assessments of its 2010 exploration program, it has decided to "totally review its strategy on all matters and will focus on maximising income and in-house technical management".

"This will include UCG operations, gas transmissions and fuel delivery to the Centauri 1 Power station and its GE LM 6000 gas-fired turbines," Eneabba said in a statement.

Eneabba has previously claimed it is the only company in the Mid West that could provide power in the region following Synergy's decision to award energy supply contracts to Verve.

Shares in Eneabba dropped 6.5 cents to 25c at 13:20 AEDT.